HB 2707C passed the Senate on March 15, so we will have a rainy day fund when the governor signs it today.  Here's how it happened:First, the House leadership and its 31 members thought it had a deal with the minority and its 29 members to pass legislation (36 "yes" votes needed) which would suspend the corporate kicker for 2005-07, place the surplus income tax revenue in a Rainy Day Fund, and provide for a percentage of the ending budget balance each biennium to go into the Rainy Day Fund until it reached 10 percent of the General Fund. Included was an increase in the inheritance tax exemption from $1 million to $2 million of the value of an estate.  Also included was an increase in the corporate minimum tax. 
Second, the House voted 31-26, defeating the reserve fund and sending shock waves through the Capitol.  In the meantime, the Senate Finance and Revenue Committee passed two bills; the first would redirect the 2005-07 corporate kicker into a Rainy Day Fund and the second would establish the fund. These proposals would go to voters to amend the purpose of the corporate income tax.  Extensive amendments to SJR 3 and SB 48 brought it to passage by the Senate.  This was the Plan B in case the House didn't come through.

Meantime, back at the ranch, HB 2707C (amended three times) and HB 2031B were discussed at an evening hearing before the Senate Finance and Revenue Committee on March 12.  HB 2031 was passed by the House, 53-4, on March 8.  It allows a 67% tax credit for C corporations with Oregon sales of less than $5 million for tax years beginning on or after January 1, 2007.  Enactment of this measure is tied to passage of HB 2707C by both Houses (with the Governor's signature) by today, March 16. 

Kappy Eaton, Governance Coordinator

The League supports prevention services, which include diversion programs and community services within the county juvenile system.  The proposed budget for the Oregon Youth Authority (OYA) includes funding for crime prevention and diversion programs in the counties.  OYA provides outpatient treatment for youth in their custody in their own homes or in community placements. OYA serves youth offenders in the community in shelters, foster care, and residential programs as options outside the correctional facilities.  The current budget proposal in SB 5544 restores some funding for community placements and treatment services.   

Oregon Youth Authority hearings started this week.  In 2003, OYA correctional facilities were closed and community resources were lost to funding cuts.   The proposed budget for the 2007-09 biennium includes a phased restoration of 145 beds in correctional facilities.  The Oak Creek facility in Albany will be re-opened for 75 young women, and 70 more beds will be opened in the Hillcrest, La Grande and Warrenton facilities.  The budget proposal adds staff for these facilities and for medical and mental health treatment. 

The LWVOR will testify in support of prevention services at every level in the community, in placements and correctional facilities.  See the LWVOR website for testimony.

Did you know?

• One out of every four Oregon households pays more than half its income for rent, leaving little to spare for food, medicine and other necessities.
• The Oregon Department of Education reported that over 13,000 children attending Oregon schools were homeless in 2005-06.
• Oregon was the fourth least affordable state for renters in the country in 2005.

In response to these sobering realities, the Oregon Housing Alliance (www.oregonhousingalliance.org), with its 50+ member organizations, is requesting $100 million in combined one-time and ongoing resources.  These dollars would be spent over the next biennium on existing and proven programs that meet the housing needs of low and very low-income Oregonians living in both rural and urban areas.  Priority uses include new and rehabbed rental housing, permanent supportive housing with services for vulnerable populations, housing and emergency intervention for the homeless, affordable homeownership, and the maintenance of the state's network of community-based housing providers.

The proposed sources of funds include an increase in the Document Recording Fee ($60 million) (see "Raising Funds for Housing," at left), lottery proceeds ($25 million), general fund allocation ($10 million), and maintaining the current dedication of utility "public purpose" funds ($5 million).

Other Housing Alliance agenda items are starting to move.  Of particular interest to the League is a bill that would repeal the preemption on inclusionary zoning and give local governments the flexibility necessary to meet their residents' housing needs.  Inclusionary zoning policies typically require private developers to build housing units affordable to a broader range of incomes than they might otherwise.  This helps guarantee that the market will offer housing options at a wider variety of cost.  These policies are used by over 200 local jurisdictions in the country and are an effective and low-cost method of supplying housing that is affordable to a broad cross-section of households.

Debbie Aiona, Housing Portfolio Member

Economic Forecast

After a glowing revenue forecast in December 2006, the March 2007 forecast, while not gloomy, is certainly not showing as robust an Oregon economy as previously.  In the indicator categories:

• employment is down (0.1%)
• personal income is down (0.8%)
• personal income tax withholding is down (5%)
• corporate income tax revenue is up ($49 million)                                                                      

The personal kicker is projected at $1.092 billion and the corporate kicker at $315 million.  The corporate kicker is given through corporate tax credits, and there is a bill now which would provide individuals with a tax credit instead of the usual check.  It probably won't go far as legislators like to feel responsible for getting checks to their constituents just before Christmas.  Budget implications include the fear that the Governor's proposal of $6.3 billion for education might not quite get there despite the contention by education advocates that $6.5 billion is necessary, and social services, public safety, health care, transportation, etc., are still open. The Ways and Means co-chairs' Legislative Budget is due immediately, and that will set the tone for the scramble for equity.  The final May forecast will determine the 2007-09 Legislative Adopted Budget (LAB).  The agreement to adjourn by June 29 is very much on the plate.

Kappy Eaton, Governance Coordinator

Ethical Dilemmas

The debate on what to do about the spending of campaign funds, compensation for legislators (including adequate expense and per diem funds), and the funding of the Government Standards and Practices Commission continues in various places.  So far, (1) the Senate Rules Committee has held numerous hearings on SB 10, a comprehensive ethics bill; (2) the House Elections, Ethics and Rules Committee met jointly with the Senate Rules Committee to hear the recommendations of the Oregon Law Commission found in six identical bills for each house; (3) the Senate Operations and Legislative Reform Committee is considering options for compensation and campaign funds; and (4) the House has passed HB 2589, which closes the "revolving door" on legislators becoming lobbyists until two years after they leave office.  The saga continues.

The League has testified on the need to connect increases in legislative compensation and expenses with tightening the ways campaign funds can be spent.  We supported SB 700, which would do both as well as reactivate the Public Officials Compensation Commission, but the timing is wrong.  We presented written information March 14 (no public hearing) on SB 5522, the Legislative Administration budget bill, emphasizing the point that there must be improvement in compensation before disallowing the expenditure of campaign money for personal expenses. Several legislators have bills to do the same things in case one of the preferred ones doesn't make it.

Kappy Eaton, Governance Coordinator